Give me correct answer with explanation..vk AP7-2A (Calculation of ending inventory, cost of goods sold, and gross margin―perpetualsystem)Soft Touch Company sells leather furniture. The following schedule relates to the company's inventoryfor the month of April:CostSalesApril 1Beginning inventory75 units$45,0003Purchase50 units31,2505Sale30 units$33,00011Purchase25 units16,25015Sale55 units68,75022Sale40 units48,00028Purchase50 units33,750Soft Touch uses the perpetual inventory system.Requireda. Calculate Soft Touch Company's cost of goods sold, gross margin, and ending inventory using:i. FIFOii. weighted-average. Round per unit cost to two decimal places.b. Which cost formula produced the higher gross margin?

Inventory Valuation is a method of calculating the value of stock at the end of an accounting…

Required a. Calculate Soft Touch Company's cost of goods sold, gross margin, and ending inventory using: i. FIFO ii. weighted-average. Round per unit cost to two decimal places. b. Which cost formula produced the higher gross margin?

Required a. Calculate Soft Touch Company's cost of goods sold, gross margin, and ending inventory using: i. FIFO ii. weighted-average. Round per unit cost to two decimal places. b. Which cost formula produced the higher gross margin?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Give me correct answer with explanation..vk

AP7-2A (Calculation of ending inventory, cost of goods sold, and gross margin―perpetual
system)
Soft Touch Company sells leather furniture. The following schedule relates to the company's inventory
for the month of April:
Cost
Sales
April 1
Beginning inventory
75 units
$45,000
3
Purchase
50 units
31,250
5
Sale
30 units
$33,000
11
Purchase
25 units
16,250
15
Sale
55 units
68,750
22
Sale
40 units
48,000
28
Purchase
50 units
33,750
Soft Touch uses the perpetual inventory system.
Required
a. Calculate Soft Touch Company's cost of goods sold, gross margin, and ending inventory using:
i. FIFO
ii. weighted-average. Round per unit cost to two decimal places.
b. Which cost formula produced the higher gross margin?

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Step 1: Introduce inventory valuation

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Step 2: Calculate COGS and ending inventory under FIFO

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Step 3: Calculate COGS and ending inventory under weighted average

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Step 4: Calculate gross margin

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included in its trial balance immediately prior to preparing the financial stater ON TIME CORPORATION Adjusted Trial Balance At May 31, 2016 (millions of dollars) Debit Credit $ 3,600 Accounts Payable Accounts Receivable Accumulated Depreciation 24 $ 5,700 20,300 5,600 Cash 3,400 Common Stock 3,100 240 Depreciation Expense Dividends Equipment Goodwill Income Tax Expense Income Tax Payable Interest Expense Interest Receivable 39,500 4,500 1,250 1,250 170 80 Interest Revenue 90 8,400 650 Notes Payable (long-term) Notes Payable (short-term) Office Expenses Prepaid Rent Rent Expense Repairs and Maintenance Expense Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Service Revenue Supplies Transportation Expense 7,610 1, 200 3,200 2,600 16,680 17,300 2,400 48,400 520 12,600 $105,170 $105,170
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